PwC study compares the governance perspectives of directors and investors
The report looks at director and investor views on executive compensation, board composition and performance, strategy and risk, communications, and recent regulatory initiatives

NEW YORK, Nov. 12, 2013 /PRNewswire/ -- PwC US today released a comprehensive report that examines the views of corporate directors and institutional investors on current corporate governance issues – finding that perspectives largely depend on "whose shoes you are in."

"We prepared this report to compare the responses of these two groups and identify areas where viewpoints are shared or differences exist," said Mary Ann Cloyd, Leader of PwC's Center for Board Governance. "We hope this information helps directors, investors and management teams better understand where their views are similar and where they differ."

In the summer of 2013, PwC conducted two surveys to gain insights from key corporate governance constituents: one survey sought the insights of public company directors and another of investors. Nine hundred thirty four directors responded to PwC's 2013 Annual Corporate Directors Survey, 70% of who serve on the boards of companies with more than $1 billion in annual revenue. At the same time, 65 institutional investors with more than $2 trillion of aggregate assets under management responded to PwC's 2013 Investor Survey.

Key survey findings include:

Voices influencing compensation. Directors and investors both believe that compensation consultants are "very influential" over board decisions on executive compensation (41% and 37%, respectively). And, both groups had similar views on the influence of institutional shareholders, rating them "very influential" at 22% and 18%, respectively. However, investors are 38 percentage points more likely than directors to believe that CEO pressure has a "very influential" effect on board decisions about compensation.

Does say-on-pay advisory voting really matter? Seventy percent of directors indicate that some type of action was taken by their company in response to say on pay voting results; 82% of investors believe some action was taken. But investors believe that directors should reconsider their companies' executive compensation plan at relatively lower levels of negative voting. One in five investors says that 11-20% negative shareholder voting signals a need to revisit compensation, compared to only 13% of directors.

Skepticism about recent regulatory and enforcement initiatives. Forty-seven percent of investors and 64% of directors say recent legislative, regulatory and enforcement initiatives have increased investor protections "not very much" or "not at all"; very few (2% and 4%, respectively) believe they have helped "very much." At the same time, a third of directors and almost one in five investors think the costs to companies of such increased activities have "very much" exceeded the potential benefits. Eighty percent of investors and three fourths of directors also conclude these initiatives have increased public trust in the corporate sector "not very much" or "not at all."

Feeling better about overall board performance. Twenty-eight percent of directors say the ability of boards to provide effective oversight has increased in the last twelve months, compared to 19% of investors. Similarly, 33% of directors say that board effectiveness in overseeing risk has increased compared to 27% of investors.

Differing interpretations of director nominee voting results. Nineteen percent of investors indicate the board should reconsider re-nomination of a director if he/she receives between 11% and 15% negative shareholder support, compared to only 8% of directors. However, an identical percentage of directors and investors believe directors should rethink re-nomination at negative voting thresholds of 16-20% and 21-30%.

In addition, data and analysis of findings from PwC's 2013 Annual Corporate Directors Survey can be viewed in full and downloaded here.

PwC's 2013 Investor Survey key results can also be viewed in full and downloaded here.

About PwC's Center for Board Governance

PwC's Center for Board Governance is a leading resource for directors. By promoting leading governance practices, the Center advances excellence in the boardroom and is dedicated to better enabling boards and audit committees to perform their important roles. To provide timely updates to board members, the Center publishes the Annual Corporate Directors Survey, monthly BoardroomDirect, and offers forums for directors to discuss current issues.

PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 157 countries with more than 184,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US. Gain customized access to our insights by downloading our thought leadership app: PwC's 365™ Advancing business thinking every day.